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China coal markets long-term outlook H1 2015

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17 July 2015

China coal markets long-term outlook H1 2015

Report summary

Slowing economic growth and its decoupling from energy demand have considerably weakened coal demand. Thermal coal demand in 2014 contracted for the first time since 1998 while metallurgical coal demand remained flat. Chinese miners are battling for survival in the current low price environment; nearly 80% of thermal coal mines and 35% of metallurgical coal mines are cash negative. Absent underlying demand improvement or supply rationalization, a recovery in coal prices looks a distant dream.

Table of contents

    • Key themes
      • Government policies are not solving China's oversupplied market
      • Environmental policies: targets emerge, but detail is sparse
      • Power reform in early stages, but could be a further drag on coal long term
    • Changes from the previous outlook
  • Economic outlook
    • Prices and politics usher in deflation, with recovery around 2020
    • Domestic thermal coal price forecast
    • Domestic hard coking coal price forecast
    • Seaborne thermal coal price forecast
    • Seaborne metallurgical coal price forecast
    • Thermal summary
      • Thermal coal demand - regional analysis
      • Coastal region
      • Central region
      • North region
      • Northeast region
      • West region
    • Metallurgical summary
      • A weak property market pushes demand lower
    • Environment and market forces pressure metallurgical coal demand
      • There will be consecutive new demand for seaborne metallurgical coal from two projects
      • Metallurgical coal demand in China expected to peak in 2023
    • Metallurgical coal demand – regional analysis
      • North region
      • North-east region
      • Coastal region
      • Central region
      • West region
    • Thermal coal supply
    • Metallurgic coal supply
    • Railroads
      • Weak coal demand will lower rail capacity utilization
    • Power transmission
    • Ports
    • Thermal coal
    • Metallurgical coal
  • Supply-demand balances
    • Coal vs environment: majority of risks point to downside for coal demand
      • Carbon emission reduction plans may evolve faster than in our base case
      • Renewables penetration and UHV transmission expansion in power markets
      • Coal quality as a problem and reshaping the future in an ultra-low emissions world
      • The trade-off between fears of nuclear plant development and increased coal consumption is hard to assess
    • Government intervention, and the pace and scale of market reforms
      • China may take drastic steps to insulate its domestic industry from coal imports
      • Traditional relationships between economic growth and power generation may be changing: the rate at which emerging economies decouple economic growth from electricity generation may be different than we forecast
      • Continual cost deflation: advances in equipment utilisation, extended diesel downside, further productivity gains, technological improvement

Tables and charts

This report includes 43 images and tables including:

  • Economic indicators
  • Thermal supply demand balance, Mt
  • Metallurgical supply demand balance, Mt
  • Risks assessment, H1 2015
  • Thermal coal demand - power sector (Mt)
  • Thermal coal demand - non-power sector (Mt)
  • Domestic thermal coal supply (Mt)
  • Seaborne thermal coal imports (Mt)
  • Domestic spot price vs long-term contract (RMB/t)
  • Market discount to FOB QHD (after energy adjustment)
  • Domestic coal prices, RMB/t - history (nominal) and forecast (real 2015)
  • Seaborne thermal coal price forecast (US$/t, Real 2015)
  • Seaborne metallurgical coal price forecast (US$/t, Real 2015)
  • Installed capacity by fuel type (GW)
  • Power generation by fuel type (TWh)
  • Total thermal coal demand (Mt)
  • Thermal coal demand - non-power sector (Mt)
  • Thermal coal production by province, Mt
  • Thermal coal seaborne imports by country and rank, Mt
  • Thermal coal landborne imports by country, Mt
  • Metallurgical coal production by province , Mt
  • Metallurgical coal imports by country, Mt
  • Metallurgical coal imports by rank, Mt
  • Power transmission import by region and power source (TWh)
  • Forecast loading port capacity in north China (Mt)
  • 2014 thermal coal trade flows (Mt)
  • 2014 metallurgical coal trade flows (Mt)
  • Domestic thermal coal margin curve (FOB Newcastle, US$61/t)
  • Domestic metallurgical coal margin curve (FOB Queensland US$106/t)
  • Supply-side initiatives: coal quality standards for domestic consumption
  • Thermal coal demand in coastal China and seaborne imports (Mt)
  • China coal supply demand balance (Mt)
  • China's five regions
  • Thermal coal demand by region (Mt)
  • Power coal demand by region (Mt)
  • Non-power coal demand by region (Mt)
  • Demand: Image 8
  • Demand: Image 9
  • Demand: Image 10
  • Demand: Image 11
  • Transport cost estimates to move coal from Ordos to QHD for private miners (RMB/t)
  • Railway capacity expansion from Three-west region and Xinjiang, 2014-2020 (Mt)
  • Forecast of railed coal to import regions by groups (Mt)

What's included

This report contains:

  • Document

    02 CMS China Coal Prices data.xls

    XLS 378.00 KB

  • Document

    03 CMS China Coal Demand data.xls

    XLS 1.98 MB

  • Document

    04 CMS China Coal Supply data.xls

    XLS 269.50 KB

  • Document

    05 CMS China Coal Infrastructure data.xls

    XLS 1.96 MB

  • Document

    China coal markets long-term outlook H1 2015

    PDF 1.22 MB

  • Document

    China coal markets long-term outlook H1 2015

    ZIP 3.80 MB

  • Document

    Executive summary

    PDF 124.62 KB

  • Document

    Executive summary

    PDF 107.75 KB

  • Document

    Executive summary

    PDF 137.21 KB

  • Document

    Economic outlook

    PDF 73.08 KB

  • Document

    Economic outlook

    PDF 56.31 KB

  • Document

    Economic outlook

    PDF 69.63 KB

  • Document

    Prices

    PDF 123.63 KB

  • Document

    Prices

    PDF 104.48 KB

  • Document

    Prices

    PDF 120.71 KB

  • Document

    Demand

    PDF 181.75 KB

  • Document

    Demand

    PDF 127.62 KB

  • Document

    Demand

    PDF 146.34 KB

  • Document

    Supply

    PDF 111.57 KB

  • Document

    Supply

    PDF 129.11 KB

  • Document

    Supply

    PDF 126.65 KB

  • Document

    Infrastructure

    PDF 501.06 KB

  • Document

    Infrastructure

    PDF 120.68 KB

  • Document

    Infrastructure

    PDF 116.85 KB

  • Document

    Trade

    PDF 84.26 KB

  • Document

    Trade

    PDF 74.55 KB

  • Document

    Trade

    PDF 84.64 KB

  • Document

    Supply-demand balances

    PDF 76.49 KB

  • Document

    Supply-demand balances

    PDF 85.23 KB

  • Document

    Risks and uncertainties

    PDF 3.60 MB

  • Document

    Risks and uncertainties

    PDF 658.91 KB

  • Document

    Risks and uncertainties

    PDF 810.95 KB

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